India's second-largest biscuit maker Britannia Industries Ltd. will make its premium brands affordable by offering smaller packs to make deeper inroads into the hinterland.
The contribution of the rural market to Britannia's business has increased to 20 percent from 15 percent two years ago, and it's growing fast, Gunjan Shah, vice-president (sales), told BloombergQuint at Britannia's office in Bengaluru. To tap this growth, the company has introduced lower-priced packs at Rs 5-10 each for its premium and mid-premium range including Treat, Choco-chip Cookies, Bourbon and VitaMarie, he said.
The Wadia Group firm expects rural business to outpace overall growth. “The rural contribution will go up by 5-7 percent across focus geographies over the next 2-3 years.”
The strategy is not different from what most Indian consumer goods companies follow, Sachin Bobade, senior research analyst at brokerage Dolat Capital, said over the phone. “Britannia wants to position itself at that price point. Besides, Parle, which has been leading the category with its glucose biscuits, is witnessing a decline. And it's a good opportunity for Britannia to fill the void.”
The 123-year-old company is looking to increase its footprint in the north and west in particular. “We are right now focused on expanding to markets we are relatively under-indexed, which is the Hindi belt states including Uttar Pradesh, Madhya Pradesh, Rajasthan and Bihar,” Shah said.
GST Impact
After the initial disruption of the Goods and Services Tax, Shah is optimistic about a "full recovery" this quarter. Ninety percent of the adjustment in the distribution channel is done, he said.
The Kolkata-based company doesn't foresee much changes in its warehouses after GST. “Maybe, a few will shut down or become a little larger, but largely not much of an impact,” he said. The company might have to close or consolidate some of its depots as the uniform nationwide levy doesn't warrant locations earlier selected based on state-wise taxes, according to Shah.
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